At the end of May, the Welsh Government produced an extraordinary budget update in response to COVID-19. Extraordinary because there has never been an update so early in the financial year. And extraordinary in the scale of changes to the budget within the financial year as a result of the need to respond to the COVID-19 pandemic.

The Welsh Government has set out plans for £2.5 billion of new spending as part of its response to COVID-19. The £2.5 billion new spending commitments can be split between two main areas of expenditure: support for business, voluntary sector and transport (£1.7 billion) and ‘health and public services’ (£0.8 billion).

This funding covers a wide range of activity, from grants to support business, through to the field hospitals and additional protective equipment for health and care staff.

Most of this extra funding has become available as a result of new spending commitments in England. But the Welsh Government has also re-prioritised £245 million in funding from EU Structural Funds and £256 million from budgets right across its different departments to support the response to COVID-19.

All of this is on top of the major shift in resources that is taking place within public services, who are pausing some services and moving some staff to work on COVID-19 related activity.

Our blog post provides a more detailed breakdown of the sources of funding and expenditure [opens in new window].

Managing COVID-19 expenditure well

The scale of expenditure on the COVID-19 response is unprecedented in recent times and the exceptionally rapid pace of decision-making and administration presents its own risks and challenges to good governance.

Nevertheless, the core principles that should underpin sound decisions about public spending still hold. The Welsh Government has reinforced with other public bodies the importance of proportionate safeguards.

• Regularity – ensuring that expenditure is lawful and complies with parliamentary authority

• Propriety – ensuring that expenditure is in accordance with the values and behaviours expected of the public sector
• Value for money – ensuring economy, efficiency and effectiveness in public expenditure decision
• Feasibility – ensuring that spending proposals can be implemented accurately, sustainably or to the intended timetable

Looking through the lens of Sustainable Development, many Welsh public bodies must also act in a manner which ‘seeks to ensure that the needs of the present are met without compromising the ability of future generations to meet their own need’.

This requirement, laid down in the Well-being of Future Generations (Wales) Act 2015, is brought into sharp focus when considering the likely long-term impacts of recent spending decisions on the public finances.

Relevant to the Well-being Goal of ‘a more equal Wales’, public bodies also need to consider the impact of their decision-making on the needs of those with protected characteristics under the Equality Act 2010.

In addition, while its commencement has been delayed due to the impact on Welsh Government business of the COVID-19 crisis, the introduction of the ‘socio-economic duty’ will require public bodies to consider the broader issue of inequality of outcome that results from socio-economic disadvantage. 

Our Audit Wales work programme

With a remit extending across most of the Welsh public sector, Audit Wales’ purpose is to assure the people of Wales that public money is well managed; to explain how public money is being used to meet people’s needs; and to inspire and empower the Welsh public sector to improve.

We have been discussing with other UK audit bodies areas of common interest as we all turn our minds to what the current crisis and the response to it means for our respective work programmes.

We recently set out details about how we have responded to COVID-19 in the short-term, including starting some new and quite different work as part of our COVID-19 learning project [opens in new window].

As well as reshaping our existing plans, we are looking at which of the specific areas of COVID-19 expenditure merit more detailed audit scrutiny. We have also been supporting the work of the Welsh Parliament’s Public Accounts Committee in its initial consideration of the Welsh Government’s financial support for business and aspects of the wider Welsh Government response.

We will shortly be publishing a report on public bodies’ counter-fraud arrangements. This work was already well underway before the COVID-19 crisis but the situation has brought certain fraud risks into sharp focus.

We are looking at how we can develop our National Fraud Initiative work to help public bodies target some of these risks.

Other examples of work that we had already been undertaking that is relevant to the current situation include our review of how public bodies have worked together through Public Services Boards to tackle the challenge of rough sleeping. We had also been looking at NHS waiting times and orthopaedic services, work that is now relevant to the question of how NHS services recover from the crisis having put elective care on hold.

We are now firmly in the midst of our annual cycle of statutory work auditing public bodies 2019-20 accounts. This work is a key part of how we assure the people of Wales that public money is well managed, albeit that much of the COVID-19 related expenditure is likely to feature in the accounts for 2020-21.

Meanwhile, our annual structured assessment of NHS bodies’ corporate and financial governance arrangements is just starting and will consider the impact of the COVID-19 crisis and how NHS bodies are approaching recovery planning as we enter the next phase of the pandemic. We plan to share the key themes from this work with a wider audience to promote learning across the NHS and beyond.

We will also be taking forward further work over the summer on the financial sustainability of local authorities and were already planning to produce an over-arching Picture of Public Services report later in 2020-21.

If you have any specific concerns about the use of Welsh public funding to support the COVID-19 response please contact us. If you would like to share any examples or experiences about how public bodies have changed the way they deliver services please email covid.learning@audit.wales.